Strategy: Contents of a strategic / business plan

The typical contents of a full form business or strategic plan are listed below.

Executive summary

• What is the business?
• What is the market?
• What is the potential for the business?
• Forecast profit figures
• Funding requirements
• Prospects for the investor/ lender

Description of the business

What is the business?

• A brief description of the business idea and why it should be a success
• History of the enterprise and its ownership
• Information about the entrepreneur’s qualifications, experience and financial status
• Location

Products and services

• A description of the product and what it does
• An explanation of ways in which the product is distinctive and unique
• Analysis of the competition
• How the product will be developed and what new products are being considered as replacements
• Intangible assets & protection (e.g. copyright, trade marks)

The market

• Size and expected growth of the market
• Analysis of market by segments
• Identification of target segments
• Competitors - who they are, ownership, size, market share, likely response to the challenge
• Customers (existing & potential) - who they are, how they buy, why they buy
• Distribution channels

Situational audit (where are we now?)

This involves data collection and analysis

Purpose of data collection and analysis:

• Determine which opportunities to pursue
• Identify SWOT
• Identify competitive advantages
• Provide a background for the formulation of strategy

Main analytical techniques:

• PEST/ PESTLE analysis
• SWOT analysis
• Competitor analysis
• Marketing audit

Statement of aims and objectives (where do we want to go?)

• A statement  of what the business should achieve over a five year period
• Aims should be expressed in terms of hierarchy of objectives becoming progressively more detailed and specific
• Vision - what the organisation will be like in the future
• Mission statement - a statement of the overall purpose and aims
• SMART Objectives - quantitative goals.
• Functional objectives - objectives for the functional areas

Strategy and tactics

• How are we to get there?
• Strategy is the broad approach to the achievement of objectives
• Summarises how to fulfil the objectives
• Tactics refer to the details of the strategy e.g. the promotional mix
• The detail will be contained in programmes and budgets

Marketing: key questions to be answered

• Who are our customers?
• Who are our competitors?
• What is the size and growth rate of the market?
• How is the market segmented?
• What is special about our product or service?
• What are our competitive advantages?
• What is our marketing strategy?

Marketing plan

• Market research
• Segmentation and targeting
• Detailed outline of the product or service
• Unique selling points
• Chosen pricing strategy
• Promotional plans
• Distribution strategy (including online)
• Customer service strategy

Operations plan

• Physical location
• The production process
• Facilities
• Equipment
• Scale & location of operations
• Capacity - potential and effective
• ICT strategy
• Engineering and design support
• Materials required
• Inventory levels and stock control plans
• Purchasing arrangements
• Sources of supply of key resources
• Quality control plans
• Staffing requirements

Management and organisation

• Organisational chart
• Details of senior management
• Corporate governance
• Staffing requirements
• Key personnel
• Recruitment and selection
• Training
• Rewards (financial & non-financial)
• Labour relations
• Employment and related costs

Forecasts in the business plan

• Sales forecast
• Forecast profit  and loss account (income statement)
• Cash flow forecast (cash budget)
• In each case this should be a month by month forecast for a minimum of two years
• Forecast balance sheet for each of the first two years
• The assumptions behind the forecast should also be included

Financial data

• Investment appraisal - payback and discounted cash flow
• Break even analysis
• Evaluation criteria for performance review
• Ratio analysis: net profit margin, Gross profit margin, return on capital employed, liquidity and solvency analysis

Financing required

• Details of capital required and uses
• The plan must include details of the external finance required
• This will be equal to the finance required less finance raise internally from existing owners and from operations
• The plan will outline how it is proposed to raise the finance
• Sources of finance: Short, medium and long term; Debt v equity